Rental Cars – Should You Pay For Extra Insurance, Or Just Let Your Credit Card Cover You?

In order to operate a vehicle legally, some sort of insurance has to be purchased. Also vehicle insurance shields from possible lawsuits resulting from a fender bender.

Minor fender benders usually do not require the operator going to hospital. The insurance coverage will pay for an operator to get checked just in case, and is a good practice. Some injuries are not visible immediately following a car wreck. Also if you vehicle is parked when a nasty type of storm or or earthquake hits. Any damages incurred will be paid in full.

If the verdict of an accident is claimed as the insured operator's fault, and the other parties are hurt, you will be excluded from the possibility of being sued. Even if a lawsuit is not pressed, the other operator's medical expenses will be paid by your insurance company. Make sure you read the limitations of what your automobile insurance provider covers with the amount of premium you pay.

Just because an insurance is offered at a low price, does not mean it is good. Lower priced insurance companies tend to not come through with payment when an accident occurs.

Another thing to think about when deciding on a low rate agency is what is the catch. Usually the catch is simple. There is no one to answer the phone when an accident needs reported. Insurance businesses need to profit, and paying wages for customer relations positions will dip into the company profits. This can cause late charges on hospital bills, repairs, and towing expenses. An accident needs to be reported immediately.

Don't be afraid to ask questions when you apply for vehicle insurance. The only way to avoid scams is to make sure you will be covered for everything you expect. All policies should be read not skimmed, before you sign your name.

Then when a conflict arises you know what the outcome will be. Eliminate the possibilities for insurance companies to take your hard earned money without compensating in case of an accident. Chances are, you will be able to read comments from other people that have been satisfied or not with the company in question. Use this as a tool to base your decision on.

Although it seems tedious make sure you consider the reputation of the provider. Check feedback sections on websites to gather facts about other consumers, situations, and how they are handled. This can assist with your decision.

On Mon, Mar 15, 2010, Mike X wrote to us:
One of the credit card benefits we look for is the rental car insurance, which usually covers the deductible on renting a car for up to 30 days at a time. You don’t seem to have placed any value on this feature, which can be large for someone like me who rents cars for a total of 60 days a year. Any comment?
It’s a great question, so we decided to do some digging into rental car insurance.
You will be charged rental vehicle repair fees, as well as repair fees for damage you cause to other vehicles. In terms of damage to other vehicles, every rental car company has to make sure the car they rent you meets the state’s minimum level of liability insurance. That’s under $50,000 in most cases, so you are liable for anything above and beyond that. This is especially pertinent to medical bills.
Unfortunately, the fees do not end there. The rental company will also charge you “loss of use”, “diminution of value”, and “administrative” fees.
Your primary source of coverage is almost always your auto insurance, and not your credit card. Generally speaking, if you buy auto insurance that extends beyond minimum liability insurance, it will extend to “leisure” automotive rentals. The only way to find out for sure is to call your insurance company. However, with this coverage comes your usual deductible of $0-$1,000 depending on your policy.
Most credit cards (major exceptions being Amex Delta card and Discover Student card) offer “secondary” coverage to your auto insurance. Diner’s Club is the only card that offers “primary” coverage, a big thing to consider if you rent cars with an abnormally high frequency.
The big difference is, secondary coverage requires you to file a claim with your auto insurance, and basically only reimburses you for the deductible you pay for your primary auto insurance. In addition, if your liability exceeds your primary auto insurance coverage, secondary coverage kicks in, often for another $50-100k. Also keep in mind that having to report a rental accident to your primary insurance company could potentially result in higher premiums.
In effect, the deductible reimbursement is usually the only benefit of using a credit card to rent a car.
Loss of use charges can really add up depending on the car’s damage severity. If it’s in the shop for a month, you’ve effectively just rented the car for a month out of pocket!
While everyone except Discover claims to cover these charges, Visa cards provide the best protection, while MasterCard and American Express have been known to hang people out to dry. They do this by refusing to pay unless the rental company shows proof that their vehicle fleet is fully utilized during the repair process, which rental companies could then refuse to provide, leaving you stuck with the bill.
Even Amex’s premium $24.95 / time rental insurance does not protect you, according to a lot of web commentary.
A “diminution of value” can be pretty substantial, because the resell value theoretically drops after you wreck the car, therefore you have to compensate the rental car company for this. However, this generally only applies to a more limited set of situations where the car is severely damaged, but not totaled.
The rental car company can also charge you an arbitrary administrative fee, usually in the ballpark of $200 dollars.
Generally speaking, no. On my trip to Hertz in California this week, the cost of extra insurance added up to $21 per day, $15-25 is typical. My maximum liability out of pocket in a wreck would be loss of use plus administrative fees, say in a typical scenario this would be $1000. $21 per day is only worth it if I have a 2.1% chance per day of wrecking. I’d venture to guess that even the worst daily drivers wreck less than 7 times per year.